On January 22, 2014, a Securities and Exchange Commission (SEC) administrative-law judge issued a decision banning the Chinese units of Ernst & Young, KPMG, Deloitte Touche Tohmatsu, and PricewaterhouseCoopers from auditing United States-listed companies for a period of six months because the Chinese firms refused to produce their work papers to SEC investigators. Those firms and a fifth defendant firm—BDO China Dahua CPA Co., Ltd.—also received the sanction of censure. BDO China Dahua CPA Co., Initial Decision Release No. 553, 2014 SEC LEXIS 234 (A.L.J. Jan. 22, 2014). The firms filed an appeal with the SEC on February 12. The appeals process will delay the effective date of the suspension, and the ruling is not expected to affect the firms’ 2013 audits. However, in addition to making it more difficult for Chinese firms doing business in the United States to obtain audits, the ruling is likely to affect ongoing and future cooperation efforts between U.S. and Chinese securities regulators.
Premium Content For:
- Litigation Section